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Jim Sinclair’s Commentary
Europe always talks everything to death. One day it’s on, the next days it is on but with other consideration.
Greece will be bailed out as all states of the USA will also be.
Video Dispatch: Germany’s Line in the Sand
March 17, 2010 | 2309 GMT
Analyst Marko Papic discusses the latest statements from Germany, which is asserting its authority amid a eurozone crisis while also defending its status as an export economy — a stance that some say hurts struggling states like Greece and Spain.
Jim Sinclair’s Commentary
Mr. Fred is demonstrating his concern for the gold price.
![clip_image002[1]](http://jsmineset.com/wp-content/uploads/2010/03/clip_image00213.jpg "clip_image002[1]")
Jim Sinclair’s Commentary
The seriousness of the present problem cannot be overstated.
QE to infinity or the Fed is history.
More homeowners are opting for ’strategic defaults’
Underwater on their mortgages and angry at banks, more borrowers are choosing to hand over the keys, even if they can afford the payments.
Wynn Bloch has always dutifully paid her bills and socked away money for retirement. But in December she defaulted on the mortgage on her Palm Desert home, even though she could afford the payments.
Bloch paid $385,000 for the two-bedroom in 2006, when prices were still surging. Comparable homes are now selling in the low-$200,000s. At 66, the retired psychologist doubted she’d see her investment rebound in her lifetime. Plus, she said she was duped into an expensive loan.
The way she sees it, big banks that helped fuel the mess all got bailouts while small fry like her are left holding the bag. No more.
"There was not a chance that house was ever going to be worth anywhere near what my mortgage was," said Bloch, who is now renting a few miles away after defaulting on the $310,000 loan. "I haven’t cheated or stolen."
Time was when Americans would do almost anything to hang on to their homes. But that commitment appears to be fraying as more people fall behind on their loans while watching the banks and lenders that helped trigger the financial crisis return to prosperity.
Jim Sinclair’s Commentary
California is leading the way. Everything starts there and works its way East.
Strategic Defaults Are Soaring In California, And Now They Might Really Explode
Joe Weisenthal | Mar. 17, 2010, 7:11 AM
More and more homeowners in California are walking away from their mortgages, even though they can technically afford them.
This is a trend that’s been happening for awhile, but it’s picking up steam, and in part these homeowners see it as a big middle finger to the bailed-out banks.
LA Times:
[Wynn] Bloch paid $385,000 for the two-bedroom in 2006, when prices were still surging. Comparable homes are now selling in the low-$200,000s. At 66, the retired psychologist doubted she’d see her investment rebound in her lifetime. Plus, she said she was duped into an expensive loan.
The way she sees it, big banks that helped fuel the mess all got bailouts while small fry like her are left holding the bag. No more.
Jim Sinclair’s Commentary
The material to lock and load against Iran is in shipment.
Final destination Iran?
Exclusive: Rob Edwards
Published on 14 Mar 2010
Hundreds of powerful US “bunker-buster” bombs are being shipped from California to the British island of Diego Garcia in the Indian Ocean in preparation for a possible attack on Iran.
The Sunday Herald can reveal that the US government signed a contract in January to transport 10 ammunition containers to the island. According to a cargo manifest from the US navy, this included 387 “Blu” bombs used for blasting hardened or underground structures.
Experts say that they are being put in place for an assault on Iran’s controversial nuclear facilities. There has long been speculation that the US military is preparing for such an attack, should diplomacy fail to persuade Iran not to make nuclear weapons.
Although Diego Garcia is part of the British Indian Ocean Territory, it is used by the US as a military base under an agreement made in 1971. The agreement led to 2,000 native islanders being forcibly evicted to the Seychelles and Mauritius.
The Sunday Herald reported in 2007 that stealth bomber hangers on the island were being equipped to take bunker-buster bombs.
Thought For This Morning:
The most important court case since derivative were invented is coming to a head.
This is not a civil suit. This is a criminal case.
Assuming that the defendants are deemed guilty the civil suits will be a slam dunk. This could cost these entities everything they have and more.
Google this and see how little is said about it.
Deutsche Bank, JPMorgan, UBS Are Charged With Fraud
By Elisa Martinuzzi and Sonia Sirletti
March 17 (Bloomberg) — Deutsche Bank AG, JPMorgan Chase & Co., UBS AG and Hypo Real Estate Holding AG’s Depfa Bank Plc unit were charged with fraud linked to the sale of derivatives to the City of Milan.
Judge Simone Luerti scheduled the trial of the four firms, 11 bankers and two former city officials for May 6, Prosecutor Alfredo Robledo said after a hearing in Milan today. The banks allegedly misled the city over swaps that adjusted interest payments on 1.7 billion euros ($2.3 billion) of bonds sold in 2005.
Prosecutors across Italy are investigating banks as local and national government agencies face potential losses of 2.5 billion euros on derivatives, lawyers say. The Milan probe may also affect cases as far away as the U.S., where securities firms have faced charges for price-fixing and bid-rigging in the sale of derivatives to municipalities, though not for fraud, according to former regulator Christopher “Kit” Taylor.
“This case could have repercussions over here if the trial showed deliberate intent,” said Taylor, a former executive director of the Municipal Securities Rulemaking Board, the national regulator of the municipal-bond market. “What happened in Europe was the continuation of a pattern in the U.S.”
JPMorgan is “vigorously” defending its position against the charges, the New York-based firm said in a statement. “The employees involved in the transactions acted with the highest degree of professionalism and entirely appropriately.”
Jim Sinclair’s Commentary
Japan looks to China for the future.
US envoy cancels Japan stop
WASHINGTON — A senior US envoy has canceled talks in Japan on a row over a military base due to scheduling problems, the State Department said Monday.
Kurt Campbell, the assistant secretary of state for Asia, had to rework his itinerary after calling off a stop in Thailand where tens of thousands of government opponents have taken to the streets, US officials said.
"Because of a change in his travel schedule, there was not enough time in his stopover in Tokyo for meetings with the Japanese government. So those meetings will be rescheduled," State Department spokesman Philip Crowley said.
A senior US official, speaking on condition of anonymity, said Campbell had initially planned to stop in Tokyo only for a matter of hours and that he could not reschedule the meetings.
Campbell, who was in Indonesia on Monday to prepare for President Barack Obama’s visit, had been expected to speak to Japan about a row over the status of the Futenma base on the southern island of Okinawa.
Jim Sinclair’s Commentary
Keep in mind that China is the banker of the USA. The mindset of "the dollar is your problem, not a problem for the USA" still prevails.
US ups pressure on China over yuan
A bipartisan group of US senators has unveiled legislation aimed at increasing pressure on China to let its currency rise in value, threatening stiff trade sanctions if Beijing does not act.
The 14 senators argue that China keeps its currency – the yuan – undervalued against the dollar, making its exports unfairly cheap, hurting the US economy and costing American jobs.
The proposed bill, unveiled on Tuesday, is also aimed at pressing the Obama administration to formally label China a currency manipulator.
The senators’ move follows a strong statement at the weekend from Wen Jiabao, the Chinese premier, that Beijing would resist any foreign pressure for a revaluation of the yuan.
Wen also blamed the US for increased tensions between Washington and Beijing, which have come amid rows over US arms sales to Taiwan, a White House visit by the Dalai Lama and a raft of other disputes.
Jim Sinclair’s Commentary
The world is in denial. When denial meets reality confidence fails.
Corporate Debt Coming Due May Squeeze Credit
By NELSON D. SCHWARTZ
Published: March 15, 2010
When the Mayans envisioned the world coming to an end in 2012 — at least in the Hollywood telling — they didn’t count junk bonds among the perils that would lead to worldwide disaster.
Maybe they should have, because 2012 also is the beginning of a three-year period in which more than $700 billion in risky, high-yield corporate debt begins to come due, an extraordinary surge that some analysts fear could overload the debt markets.
With huge bills about to hit corporations and the federal government around the same time, the worry is that some companies will have trouble getting new loans, spurring defaults and a wave of bankruptcies.
The United States government alone will need to borrow nearly $2 trillion in 2012, to bridge the projected budget deficit for that year and to refinance existing debt.
Indeed, worries about the growth of national, or sovereign, debt prompted Moody’s Investors Service to warn on Monday that the United States and other Western nations were moving “substantially” closer to losing their top-notch Aaa credit ratings.
Jim Sinclair’s Commentary
Have you heard the screaming denials of the perps on this subject?
EU’s Barnier says will tackle short-selling
Wed Mar 17, 2010 9:50am GMT
BRUSSELS (Reuters) – The European Commission will crack down on "naked" selling and speculation in the market for credit default swaps with proposed controls as soon as June, the EU’s financial markets chief said on Wednesday.
Politicians have said speculation by hedge funds in credit default swaps or government debt insurance compounded the borrowing problems of Greece, the euro zone’s most troubled economy, and they have called for stricter controls.
In particular, France and Germany have criticised so-called naked selling in which a buyer does not own the government bonds related to the credit default insurance. They see it as a punt on the price of the bond falling that destabilises the market.
On Wednesday, Barnier met European parliamentarians and said he would propose rules to curb naked selling.
Speaking to a group of influential parliamentary committee members who will play a key role in passing such proposals into law, he said: "We will be proposing on naked selling and credit default swaps."
Jim Sinclair’s Commentary
The Central Bank of Central banks (IMF) and the forthcoming virtual reserve currency.
RBI signs Note Purchase Agreement with the IMF
March 12, 2010
The Reserve Bank of India (RBI) has entered into a Note Purchase Agreement with the International Monetary Fund (IMF) under which the RBI shall purchase from the IMF notes for an amount up to the equivalent of US $10 billion. This is a part of the international efforts to support the IMF’s lending capacity following the decision of the G-20 in its London Summit to treble the resources available to the IMF to $ 750 billion. This agreement is a temporary bilateral arrangement for an initial period of one year, which may be extended by a period of upto two years. Permanent increases in the resources of IMF are expected to take place through an increase in quotas and standing borrowing arrangements which are currently under negotiation. With the signing of this agreement by the RBI with the IMF, India as member of the G-20 has fulfilled its commitments in this regard.
Jim Sinclair’s Commentary
The answer is yes for the reasons given herein.
Is the Fed Painted Into a Corner?
March 16, 2010
David Goldman
China and Japan have been reducing their purchases of US government securities, while US and (presumably) foreign banks have been increasing their holdings.
Since the beginning of the recession, banks have bought about $300 billion worth of US Treasuries and reduced their commercial and industrial loans by about $350 billion. Foreign purchases, as of January, were still running at a $60 billion monthly rate–about $195 billion during the last three months for which we have data. That’s an annual rate of nearly $800 billion, or about half the Treasury’s annual borrowing requirement.
But the demand came not from foreign central banks, but rather from “other foreigners.” Most of this reflects the use of the carry trade by foreign banks and hedge funds, who are doing exactly what the American banks are doing: borrowing at 0.25% from central banks and lending it back to the US government at 1% or 2% depending how far out on the curve they go.
The demand could potentially be coming from the oil exporters, who appear to be net sellers. On a geographic basis, the main buyers are the “United Kingdom” and the “Caribbean” (that is, within the banking and hedge fund arena).
If you raise rates, the carry trade will come crashing down, and so will the Treasury market, the mortgage market and the US economy along with it. The Fed is stuck with loose money, just as the Bank of Japan was during the 1990s for the same reasons.
Jim Sinclair’s Commentary
The US dollar is no safe haven.
Global FX reserve system needs reforms – ADB chief
Wed Mar 17, 2010 1:44pm IST
By Yoko Nishikawa
TOKYO (Reuters) – The current dollar-denominated global reserve system needs to be reformed to better fit economic reality and ensure global financial stability, the head of Asian Development Bank said on Wednesday.
ADB President Haruhiko Kuroda also said robust growth in developing Asia could prompt a surge in capital inflows to the region, leaving Asia vulnerable to more volatile exchange rates and exacerbating trade and other imbalances.
That will put more pressure on a global reserve system that is already scored with fault lines, he added.
Jim Sinclair’s Commentary
The problem is Wall Street owns Washington so little is apt to happen.
I would love to be wrong, but I really doubt I am.
Rep. Bachus demands hearing on Lehman report, says Fed, SEC may have ‘turned a blind eye’ on fraud
Wednesday, March 17th 2010, 11:29 AM
A Republican lawmaker requested a congressional hearing on a bankruptcy examiner’s report on Lehman Brothers Holdings Inc (LEHMQ.PK), saying the findings cast doubts on the Federal Reserve’s supervisory role.
Representative Spencer Bachus, the top Republican on the House of Representatives Financial Services Committee, said the report highlighted regulators’ failure to act on evidence of accounting gimmicks used to hide Lehman’s insolvency.
"Either the SEC and the New York Federal Reserve failed to discover the ongoing accounting fraud at Lehman, or they turned a blind eye to the ongoing fraud," Bachus said in a letter to the committee’s chairman, Barney Frank, requesting a hearing.
He said the hearing would be especially important given legislative proposals to expand the Fed’s regulatory powers.
Under legislative packages in the House and Senate that represent the most extensive rewriting of financial market rules since the 1930s, the Fed would gain greater ability to supervise the largest and most complex financial firms.
Jim Sinclair’s Commentary
More information on the most important development since OTC derivatives were invented.
Deutsche Bank, JPMorgan, UBS Are Charged With Fraud (Update2)
March 17, 2010, 1:20 PM EDT
By Elisa Martinuzzi and Sonia Sirletti
March 17 (Bloomberg) — Deutsche Bank AG, JPMorgan Chase & Co., UBS AG and Hypo Real Estate Holding AG’s Depfa Bank Plc unit were charged with fraud linked to the sale of derivatives to the City of Milan.
Judge Simone Luerti scheduled the trial of the four firms, 11 bankers and two former city officials for May 6, Prosecutor Alfredo Robledo said after a hearing in Milan today. The banks allegedly misled the city over swaps that adjusted interest payments on 1.7 billion euros ($2.3 billion) of bonds sold in 2005.
Prosecutors across Italy are investigating banks as local and national government agencies face potential losses of 2.5 billion euros on derivatives, lawyers say. The Milan probe may also affect cases as far away as the U.S., where securities firms have faced charges for price-fixing and bid-rigging in the sale of derivatives to municipalities, though not for fraud, according to former regulator Christopher “Kit” Taylor.
“This case could have repercussions over here if the trial showed deliberate intent,” said Taylor, a former executive director of the Municipal Securities Rulemaking Board, the national regulator of the municipal-bond market. “What happened in Europe was the continuation of a pattern in the U.S.”
JPMorgan is “vigorously” defending its position against the charges, the New York-based firm said in a statement. “The employees involved in the transactions acted with the highest degree of professionalism and entirely appropriately.”
